Climate change and global finance: Is the financial sector reaching a tipping point?
In January 2020, viewers of the U.S. business channel CNBC witnessed an unusual scene. U.S. stock market guru Jim Cramer, who rose to fame as an author of books whose titles usually include the words “get rich,” was asked about the prospects for oil and gas stocks, such as Chevron or Exxon. His answer was surprising: “I’m done with fossil fuels. They’re done. They’re just done.” Cramer explained that this was because financial managers and pension funds are divesting from fossil fuels, and that young people don’t want these types of shares (Lewis, 2020).
This statement, coming from a man who is not exactly known for his altruism and concern for the environment, might only have anecdotal value. But even anecdotes can be indicators. Cramer, after all, is not alone: At almost exactly the same time as Cramer was making his comments, Larry Fink, CEO of BlackRock, the world’s largest asset manager, wrote an open letter to the CEOs of the companies in which BlackRock invests – and that’s almost every listed company. In the letter, Fink talks of no less than “a fundamental reshaping of finance.” He says that because climate risks are investment risks, there is a need for transparency for shareholders on sustainability-related issues, and all investments must become more sustainable in general (Fink, 2020).